The Securities and Exchange Commission (CVM) announced changes to the general rule for investment funds with new CVM Instruction 175, which comes into force on April 3 of this year. Want to know more regarding what to expect from this change in 2023? That’s exactly what we’re going to talk regarding here today.
The new rule intends to include and transform investment funds into annexes to CVM 555 and CVM 356 instructions, dealing with investment funds in general and better addresses funds that invest in credit rights (FIDCs).
Resolution 175 will be the new regulatory framework for the sector, replacing Instruction 555. This means that the investment fund market will have new rules as of April 2023. CVM has adopted general rules applicable to all investment funds, with specific rules that regulate the categories of investment funds that already exist.
The project resulted in the repeal of 38 norms and at that first moment, the annexes are financial investment funds (FIF) and receivables funds (Fidc). There is also the possibility that in the future the new resolution will be improved.
What changes now with the new rules?
Check out the new rules that will start to apply from April this year:
Thinking regarding a more sustainable world, the new resolution 175 sought to be less invasive and restrict the use of terms related to sustainable finance in the name of the funds. Of course, this provided that investment policies seek to generate environmental benefits.
The CVM informed that the solution adopted is due to the practices of more developed markets, with a focus on providing information to the investing public and fighting when a company or fund tries to appear “green”, but in fact it is not.
So, according to the new rules, if the fund or the class of quotas has a denomination that alludes to sustainable finance, the regulation must follow this trend and discipline the matter, mainly in the provision of information to investors.
The disclosure material must inform whether the origination of positive socio-environmental benefits follows the investment policy or if the objective is only to integrate ESG factors into portfolio management. Not to mention that the prospectuses for the distribution of closed class quotas need to bring more information on the subject.
- Omission of wallets for 180 days
On an experimental basis, equity, exchange rate, multimarket and fixed income (FIF) fund managers can hide the composition of their portfolios for up to 180 days, compared to the previous period of 90 days. According to the CVM itself, this was already an old issue to be resolved.
The entity is also working on a project that aims to modernize the information regime of investment funds. Thus, making it more efficient, cheaper and providing useful information for investors interested in this type of asset.
What is CVM?
It is very common for investors, especially beginners, to have doubts regarding how the investment world works. Items such as transparency and, above all, environmental safety are some of the main questions.
Thus, it is worth knowing that the CVM is the body that acts with the objective of regulating and supervising this market. The autarchy was founded in 1976 and, although it is currently linked to the Ministry of Economy, it has autonomy and independence in its activities.
The body is composed of a collegiate of five members: a president and four directors. The group is nominated by the President of the Republic and must be approved by the Federal Senate. Thus, it is responsible for creating and monitoring norms that will guide the Brazilian financial market.
As a way of ensuring greater fairness to the institution, there is no opportunity for re-election. In addition, the mandate of the group lasts for five years. Thus, they do not follow the presidential election process — minimizing the chances of conflicts of interest.
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